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May 25, 2018

Real Estate Report Card

The Pain Spreads in Real Estate

Hotels are benefiting from increased tourism, but economic conditions are hurting other sectors of the commercial market.

Richard Westlund | 7/1/2008

Mike Spelcher
STRONG SHOWING: Mike Speicher isn’t surprised that Florida’s hospitality markets are strong this year. As general manager of the new Westin Imagine Orlando, he’s seen a steady flow of hotel guests for the 315-room Intrawest hotel/condominium near the Orange County Convention Center. “In our market, everyone seems to be doing well.” [Photo: Jeffrey Camp]
In a challenging year for most of Florida’s commercial markets — office, industrial, retail and hospitality — the hotel sector continues to be a bright spot. In May, Visit Florida, the state’s tourism agency, announced a 3.4% increase in visitors in the first three months of 2008 compared to a year ago. Miami-Dade ranked first in the nation for hotel occupancy during that quarter at 81.4%. Orlando came in fourth at 74.5%, according to Smith Travel Research statistics. Meanwhile, office vacancy rates are rising. The retail sector has been most affected by the nation’s credit crunch and the state’s slower population and economic growth, as many national and regional retailers have scaled back their expansion plans. Following is a closer look at the state’s main commercial markets:

Hospitality: Sunshine Still Sells

GIVE AND TAKE: Tight credit will stymie hotel growth, but that will benefit existing hotels, including the renovated Foutainebleau. [Photo: Matt Dean]

The Sunshine State’s perennial appeal to leisure and business travelers has supported a modest wave of new hospitality investment throughout the state. In Miami Beach, two oceanfront landmarks — the Fontainebleau and Eden Roc — are scheduled to reopen soon after extensive renovations. Along I-95 to the north, a new Holiday Inn Express opened recently in Stuart with a Courtyard Marriott to follow later this year.

However, tighter lending standards will limit the supply of new hotels in the next few years, says Mark Lunt, principal at Ernst & Young Hospitality Services Group in Miami. “The credit crunch means there will be no surge in supply,” he says. “That will benefit existing hotels and result in higher room rates in cities like Miami, Fort Lauderdale and Orlando, which are enjoying great demand.”

Christian Charre, senior vice president at Jones Lang LaSalle in Miami, says the weakest link in the hospitality sector is the condo/hotel concept, which has declined due to the residential market standstill and general lack of investor interest. “Consumers have found there is no resale market now for their units,” he says. “Then they look at the potential rental income from the room and compare it with their expenses.”

On the other hand, Charre says affluent vacation-oriented buyers still like the fractional ownership concept — purchasing 1/8 to 1/10 of a large unit in a complex managed by Ritz-Carlton or other upscale chains. “In this case, it’s a lifestyle purchase rather than an investment. There’s a limited supply in the market, and it has a definite appeal to second-home buyers.”

Tags: Dining & Travel, Around Florida, Housing/Construction

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